1/15/2018

NIGERIA’S WORLD BEATING STOCKS MAY GAIN EVEN MORE IF OIL PRICES HOLD UP

Dangote Cement Plc, the largest
company on the exchange, has climbed to a record high. The advance will
probably be

sustained thanks to rising prices for oil, Nigeria’s main export,
and as investors look to increase their holdings of what remain among the
cheapest stocks in Africa, according to the asset management arm of South
African lender FirstRand Ltd.

Nigerian stocks are leading the
world so far this year and foreign investors have been crucial in driving the
market higher. Even after the gains, Nigerian valuations are seen to be the
least expensive among the major African equity indexes which suggests there’s
further upside, according to Cape Town-based fund Allan Gray.

However there are still some
warning signs. The 120-day correlation between Nigerian stocks and Brent crude
is now around the highest in two years. If oil prices reverse their 45% climb
since June, Nigerian assets could take a hit. That’s a major reason HSBC
Holdings Plc has a negative outlook on the stocks.

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